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A healthy tax

We have made it abundantly clear that we believe raising taxes on businesses in the middle of an economic crisis is a foolish endeavor.

But there’s an exception to every rule. And, when the businesses in question are clamoring for a new tax to be imposed on them, you can be sure something unusual is afoot.

The businesses in this case are hospitals throughout Colorado. And they are backing House Bill 1293, known as the Colorado Health Care Affordability Act. The legislation, which received an initial hearing in a House committee Friday, was crafted by Gov. Bill Ritter’s administration and members of the Legislature’s Joint Budget Committee, with the assistance of the Colorado Hospital Association and other health-care officials.

It will impose a new hospital provider tax that is designed to generate $600 million a year for the state.

So why would the Colorado Hospital Association and its members — including St. Mary’s and Community hospitals locally — enthusiastically endorse taxing themselves to the tune of $600 million a year?

Because that money will be used to access an equal amount of funds from the federal government for Medicaid and related programs. And the combined $1.2 billion will allow medical coverage to more people who are currently uninsured by expanding Medicaid and children’s health insurance programs in Colorado. A portion of it will also go to increase the amount of money hospitals are reimbursed for serving Medicaid patients.

Finally, the additional revenue will help hospitals cover the administrative costs of managing such programs.

The benefits won’t be just to hospitals and low-income families. By expanding the rolls of those covered by Medicaid, the program will reduce the costs that are incurred when hospitals must serve people with no insurance and who can’t afford to pay for services. Those costs are passed on to others who can pay, usually those with private insurance. And private insurance companies then charge more to their customers — a cost shift that affects individual consumers and businesses which provide insurance to their workers.

Also, the new fee won’t be shifted to consumers. Language in the bill specifically prohibits hospitals from passing along the tax to the customers they serve. Instead, hospitals expect to recoup the cost by serving more people who are insured and by receiving more in reimbursement for Medicaid.

House Bill 1293 is not panacea for all that ails our health care system, but it is no placebo, either. It offers a real remedy for one part of the problem. That’s why hospitals support it and why we hope the Legislature will approve it.